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Why you Should Pay off Car Loans Early in Dunnville

Why you Should Pay off Car Loans Early in Dunnville

Paying off an auto loan early isn’t for everyone but if you can afford it, there are several good reasons to do it. Our Dunnville auto loans team shares five good reasons to pay off car loans early.


For many borrowers, sticking to the term and the monthly payments of an auto loan is nice and predictable. That is perfectly fine if it works for you and we could all do with a little more predictability in our lives!


For those who want to pay their car loan ahead of time, here are five good reasons to do it.


1.   Save on interest


You pay interest every month on an auto loan. The higher the rate, the higher the interest payment. The longer the loan, the more interest payments you’ll make.


If you pay off car loans early, it means making fewer of those payments, which saves interest.


For example, a $15,000 auto loan at 7% would cost $2821 in interest over 60 months. Add $50 per month to your loan payment and you reduce the loan term by 10 months and the interest paid by $487!


2.   Be free and clear for a while


For many of us, auto loans are a cycle. We pay one off, buy a new car and get another. Or we roll one auto loan into another when we upgrade the car.


Paying off your loan early means having some space to breathe easy without loan payments. If you can hold off upgrading your car for a while, that’s a time to relax and enjoy having a little more money each month.


3.   Start saving


If paying the auto loan doesn’t leave you much to save for other things, now would be a good time to set money aside. Saving for emergencies is a key way to avoid getting into debt.


Not having to get a payday loan or pay for something on the credit card means staying ahead, which can make a huge difference.


If you don’t use the savings for emergencies, you could put it towards a down payment on your next car!


4.   Lower your debt to income ratio


Your car loan is counted against your debt to income ratio so if you want to borrow for something else, you may not qualify. Once the auto loan is paid, this disappears and will no longer count against any future borrowing.


5.   Trade up earlier


If you want to buy a newer or better car, you are now completely free to do so. While you can roll one auto loan into another and trade up whenever you like, some people prefer to keep loans separate.


Once your auto loan is paid up, you can buy a new car whenever you feel like it.


Those are just five benefits of paying off your auto loan early. We’re sure you can think of more!


We will use all our skill and experience to deliver the lowest possible Dunnville auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.


For any questions or concerns, please don't hesitate to contact us here!


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Categories: Auto Loan

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